Business North - The Daily Briefing - Business Newspaper OnlineStudy: Duluth needs more housing as workforce grows

5/6/2014

PHOTO: The study finds current housing stock does not meet residents’ needs, pointing to Duluth’s large supply of older units.

The current Duluth job market is growing at a rate that outpaces the availability of quality housing stock for the workforce moving here to fill job vacancies, says a new study commissioned by the Duluth Economic Development Authority (DEDA) and Duluth Housing and Redevelopment Authority (HRA)

The “Workforce Housing Needs in Duluth” study, released Tuesday morning, says the city’s economy can support the development of 4,400 single- or multi-family housing units that are new, rehabilitated, income-based rentals or higher-end market rate rentals.

“The recent housing shortage has a direct correlation to the significant economic growth in the healthcare services, aviation, technology, retail, and education sectors,” the city said in a news release. “Over the next seven years, employment in the Arrowhead region, including Duluth, is projected to grow by 13.1 percent. Companies like AAR Aircraft Maintenance Services are expanding and in need of attracting more mechanics; Lake Superior Consulting and Enbridge are seeking skilled engineers; and the city will be experiencing a construction boom over the next several years with about $200 million in economic development projects in downtown alone, one of which is the $70 million maurices headquarters that will house 600 employees, 175 of which are new positions. All of this activity equates to increased jobs and recruitment for employees who will likely relocate from other cities or states.”

The study finds current housing stock does not meet residents’ needs, pointing to Duluth’s large supply of older homes. It contends many of them “may not appeal to younger home buyers.” It says the rental market is tight with a vacancy rate of 4.1 percent, according to the City of Duluth’s Community Development 2012 Housing Indicator Study.

• The average household income in Duluth is estimated at $39,878 as of 2014 and is expected to increase to $44,901 by 2019; more income opens the door to more housing options for households;

• Duluth’s housing stock is aging and in need of rehabilitation; newer construction units are also needed;

• A survey of larger rental units and upscale rentals showed a vacancy rate of under 2.0 percent; renters are seeking amenities such as covered parking and more square footage.

• Financing tools and incentives in the form of tax credits, grants or tax increment financing could help the development of additional housing stock in Duluth.

“We are taking decisive steps based on the feedback from partners to address this growing housing shortage,” Chris Eng, DEDA executive director, said in a news release. “Duluth is fortunate to have a booming economy. As our community grows and changes, we want to make sure that residents have access to quality housing that meets their needs and enhances their quality of life. We can’t sit idly by and miss out on key opportunities that keep Duluth on an upward trajectory.”

“We are looking at all of our housing development opportunities and asking for partners to come to the table,” added HRA Executive Director Rick Ball. “We have incredible real estate and have another reason why developers should make investments in Duluth: build it because they’re coming.”

A copy of the study is available on the City’s website, http://www.duluthmn.gov/business-development/housing-summit/

More information can be obtained by contacting Eng at ceng@duluthmn.gov or Ball at rball@duluthhousing.com